Real estate prices in United Arab Emirates capital Abu Dhabi are also down an average of 20% since a peak last summer as the region's property sector is dealt a worse than expected blow by the global financial crisis, according to a report from Morgan Stanley.
Anecdotal evidence suggests sharp falls in transaction volumes in the fourth quarter of last year due to deteriorating economic conditions, the disappearance of speculative buying and the lack of financing, the report also says.
It points out that since September Dubai apartment prices have fallen 25% and villa prices are down 26% and that the figures show that claims from developers about the prices resilience of villas and low-rise building has not been borne out.
Prices have fallen even more in prestige developments. Luxury properties at the Burj Dubai development that includes the world's tallest tower and the manmade Palm Jumeirah are down 35%, the report shows. And units at Aldar Properties' Raha Beach development had suffered a near 30% fall.
It reveals a worsening crisis in the real estate sector. Some $263 billion worth of projects in the UAE have been delayed or cancelled, Morgan Stanley said.
Rents in Dubai were down 7% in December from a peak last summer, while the cost of renting villas had declined 10%.
However according to some real estate agents prices could be declining even more. One agent dealing in top-end properties on Palm Jumeirah is reporting that prices have fallen by more than 50% since September.
Four-bedroom garden homes on the Palm are now selling as low as $1.8 million, down from $3.8 million in September, according to sales agents PowerHouse Properties.
'We've seen a steady stream of bargain hunters in the market shopping for these prestigious addresses, with many motivated primarily by price. Many end-users who previously could not afford to live on Palm Jumeirah are also now turning their attention to the bargains currently on offer,' said Ian Hainey, Palm sales specialist for the company.
Palm signature villa prices have also fallen, with even the most popular styles that were selling for over AED30 million six months ago now appearing on the market for under AED15 million, he added.
